Enterprise Bill [HL]

Lord Morris of Handsworth Excerpts

Monday 2nd November 2015 Grand Committee

[Baroness Neville-Rolfe]

My Lords, I welcome all noble Lords’ comments. It was good to have the contributions of the noble Baronesses, Lady Byford and Lady Golding, and the noble Lord, Lord Snape. I think there is a large element of agreement in the Room that quality is important. I will come on to how we are going to achieve that.

I will start by addressing Amendment 49G, on the living wage. As I have made clear previously, we believe that apprenticeships provide the chance to gain new skills and knowledge, which employers really value. The Government are committed to improving living standards, particularly for the low paid, and from 1 October 2015 the national minimum wage rate for apprentices was increased to £3.30 per hour, which was significantly higher than the £2.80 per hour recommended by the Low Pay Commission and represented a rise of 57p per hour for the apprentice. It is estimated that 75,000 apprentices will be covered by this new rate.

However, that is not a guide to what employers should pay, and employers are encouraged to pay higher where they are able to do so, with many employers choosing to pay more than the minimum rate. But we must recognise that apprentices are, at least initially, less productive than other workers. We do not want to stop apprenticeships—especially in sectors such as crafts, which are close to the heart of noble Lord, Lord Young—by making them unaffordable to employers. As an economist by background and a businesswoman, I assure noble Lords that that can be a risk.

Everyone who is entitled to the national minimum wage should receive it. We recently announced measures that will strengthen its enforcement. The new national living wage is an essential part of moving to a higher-wage, lower-tax, lower-welfare society. Work must pay for hard-working people in the UK. The national living wage will be introduced from April 2016 and will be set initially at £7.20 per hour. Apprentices aged 25 and over who have completed their first year will be entitled to this rate of pay. It will of course be properly enforced.

Amendment 49H is intended to enable the Government to make regulations to put in place apprenticeship training for supervisors of apprenticeship programmes. As my noble friend Lord Courtown said in his famous letter, complaints can also be made to the Skills Funding Agency, which is responsible for running the National Apprenticeship Service, which helps employers deliver apprenticeship programmes within their organisations. This includes a website and a helpline designed to support both employers and potential apprentices. Through the website, both small and large businesses can find a detailed breakdown of how they can best work with training providers to deliver an apprenticeship programme, including what the terms for offering an apprenticeship are. For businesses with fewer than 250 employees, the National Apprenticeship Service has a dedicated small business team, which specialises in meeting and supporting the needs of smaller employers.

Of course, we must remember that the majority of apprentices are, first and foremost, employees, as was emphasised by the noble Lord, Lord Snape. Employment and health and safety law apply to these apprentices just as they do to other employees—I am glad to have the opportunity to say that today—but we want to ensure that apprenticeships are as simple for businesses to offer as possible, as we know that this will lead to more opportunities for young people.

Amendment 50AA would require the Government to make regulations setting out further minimum standards for apprentices within 12 months of the Act being passed. I thank my noble friend Lord Hodgson for his support in this area, and I look back with approbation at the points made by my noble friend Lord Baker of Dorking at Second Reading in this important area about how we change things for the better and how we get quality right.

Turning to quality, it is worth saying that the Government have already taken steps to improve the quality of apprenticeships. Short-duration apprenticeships have been removed from the system; apprenticeships must provide substantial and sustained on- and off-the-job training and last a minimum of 12 months; apprenticeships must be real jobs, leading to competency in an occupation; and they need to deliver transferable skills, including English and maths, so that people can progress their careers.

I do not agree that apprenticeships have to be old-fashioned. I have been struck by the way employers are developing new standards to ensure that apprenticeships meet the skill needs of their sectors and provide quality. The published trailblazer quality statement sets out a range of measures to retain and improve quality, including the requirement for all apprenticeships to last at least 12 months. The new standards will replace existing complex frameworks with short, simple, accessible standards written by employers in language they understand.

The noble Lord, Lord Young, and my noble friend Lord Hodgson rightly referred to the Ofsted report. It criticises the quality of provision as it has been, not that which is being designed and put in place through our reforms. As I was explaining earlier, we are in transition. Putting an end to poor-quality training lies at the heart of our reforms. Ofsted’s report backs up the findings of our 2012 review and provides further evidence in support of our decision to put employers, rather than trading providers, in the driving seat.

My noble friend Lord Hodgson asked if he could offer a bright researcher an apprenticeship. An employer can offer an apprenticeship, providing that the employer satisfies the Skills Funding Agency’s rules and requirements to the approved English apprenticeship standard. People can always complain to the SFA if they are not happy. On the face of it, I think my noble friend should be encouraged, but clearly the apprenticeship must be of the right quality and duration; he must be a model employer.

We are also introducing more rigorous testing and grading at the end of the apprenticeship to ensure that apprentices are reaching full occupational competence—again, the detail was set out in the letter from my noble friend Lord Courtown. I can also confirm that, from 2018, we will use apprenticeship outcomes data to produce performance tables for 16 to 19 year-olds. This will sit alongside apprenticeship success rates, which are already published by BIS, and will help to inform choice for young people and employers and drive up the quality of provision.

The success of the minimum standards and the further provisions to improve quality is beginning to be borne out by apprenticeship evaluation reports. In 2014, they found that 89% of apprentices and 82% of employers were satisfied with the apprenticeship respectively. I mention that, but I do not think that we should rely on it; the quality points raised are important. We do not judge that the Government should be committed to placing further requirements within a set framework. It is important that employers, providers and apprentices have the time to engage with the apprenticeship reforms.

On Amendment 50AC, the information requirements as currently set out in the clause enable the Secretary of State to understand whether public sector organisations are meeting their targets and to ensure that the bodies are publishing that information to increase transparency. The Government intend to minimise the administrative burden associated with reporting under the clause. Any additional information prescribed by the Secretary of State will be related to the apprenticeship target.

We have been discussing the need for more quality here, but people out there are also concerned about potential bureaucracy in the new arrangements, and we must have a balance. We are unable to agree that it is appropriate to mandate public sector bodies to provide and publish the additional information.

Finally, the noble Baroness, Lady Golding, asked about the link with prompt payment. There is no link—except that they are in the same Bill, which is good for us to reflect on—between the apprenticeship clauses and the late payment provisions, but they are both designed to promote enterprise and growth.

I hope that in the light of those comments noble Lords will feel able not to press their amendments this evening.

[Lord Morris of Handsworth (Lab)]

I bring to the attention of the Minister and, indeed, the Committee that of those affected by the closures in the steel industry among the worst sufferers are hundreds of apprentices. They have not got the same facility or ability to change and move employment. In the periphery of this debate, I ask the Minister to take a very good look and have some consultation on how apprentices can be placed, or give some measure of support for continuity of, if not the practical dimension of their learning, at least the academic dimension.

[Baroness Neville-Rolfe]

I am extremely grateful to the noble Lord, Lord Morris, for intervening. I can certainly say that this is a very important point. I know that the task forces set up to look at what can be done for employees who, sadly, lose their jobs are on to this point on apprenticeships. I know that in Redcar some new jobs have already been found, but I am certainly happy to talk to the noble Lord further. I am happy to put that on the record.